Abstract

One of the main sources of economic growth lies in the successful development and application of new knowledge and innovation. This paper empirically examines innovative practices in Croatian export firms. The survey investigates innovative activity in the last five years. Institutional theory is used to explain the initial lack of innovation in the early 90's with respect to the current explosive growth of innovation, as Croatia is a transition economy that was previously socialist. Our findings suggest that few firms actually are innovative and that innovation is used to become more efficient and to have a high quality product. We also found that larger firms are more innovative than smaller firms.